You can claim tax benefits on the Pre‑EMI interest of an under‑construction home loan subject to specific rules under Section 24(b) of the Income Tax Act in India. But how to claim pre EMI interest on home loan? During the construction phase, you only pay interest on disbursed loan tranches, known as Pre‑EMI.
This interest cannot be claimed immediately in the year it’s paid. Instead, once construction is complete and possession obtained, you can aggregate the total Pre‑EMI interest paid and claim it in five equal annual installments, starting from the year of completion. For instance, if you pay Rs. 5 lakhs in Pre‑EMI interest during construction, you can claim Rs. 1 lakh per year over the next five years once the property is ready.
Additionally, any interest paid in the completion year (or a part of that year) is deductible in that same year on top of the first installment of the Pre‑EMI interest.
The deduction limit under Section 24(b) is Rs. 2 lakhs per annum for self‑occupied property; there's no upper cap for rental properties.
The principal amount of Pre‑EMI paid is not deductible under Section 80C during the construction phase principal repayments only qualify post‑possession, and even then only within the Rs. 1.5 lakh annual ceiling.
If the project completion gets delayed beyond five years, the deduction limit for self‑occupied property drops significantly to Rs. 30 000 per year.
However, recent amendments allow for some leniency if delays happen, enabling claims up to Rs. 2 lakhs even if actual possession is delayed by up to two years.
Principal paid during the Pre‑EMI phase doesn't qualify for tax savings until after possession, under Section 80C.
Hope this helps!
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Can I Claim Pre EMI Interest?
Ekta
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2022-03-04T19:18:04+00:00 2025-07-04T11:47:15+00:00Comment
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